TMI Blog1997 (11) TMI 369X X X X Extracts X X X X X X X X Extracts X X X X ..... as a sole-proprietary concern was organised in the year 1982-83. Earlier it was a partnership firm. No central excise licence in form L-4 was obtained for the sole-proprietary concern, as required under Rule 174 of the Central Excise Rules, 1944 (hereinafter referred to as the Rules ). No declaration as stipulated in Rule 174A for availing of small scale exemption was filed. During the relevant time exemption to small scale units was provided by exemption Notification No. 43/82-C.E., dated 28-2-1982. The appellants did not file any declaration, as stipulated in para 3 of the Notification which reads as under : 3. Where a manufacturer has not cleared the said goods in the preceding financial year, or has cleared the said goods for the first time on or after the 1st day of August in the preceding financial year, the exemption contained in this notification shall be applicable to such manufacturer - (i) If he files a declaration with the Assistant Collector of Central Excise that the aggregate value of clearances of the said goods by him or on his behalf, for home consumption, from one or more factories, during the financial year is not likely to exceed rupees one lakh, and (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s during 1-4-1984 to November, 1984 was Rs. 6,40,363.75. Whatever, is not included could not be excluded. As CED was not included in the admitted value of clearances, there was no question of any exclusion on this score. Further, before the adjudicating authority the appellants had agreed to pay CED on the excess clearances during 1983-84 and on the entire clearances upto November, 1984 during the year 1984-85. No plea had been raised before the adjudicating authority that the declared value should be deemed to be the cum duty value even when no CED was paid by them on any value. 10. As no CED was paid at the point of clearance, there is no question of determination of the assessable values in this case. In the case of I.T.C. Ltd. v. Union of India, 1987 (30) E.L.T. 321 (Del.), the Delhi High Court had observed that the assessable values were required to be determined on the basis of the effective duty payable after taking the exemption notification into account. Referring to the amendment to Section 4 of the Act in the year 1982, adding Explanation to Section 4(4)(d)(ii) of the Act, they held that the amendment had rendered inevitable the application of the notification also at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that in view of the amendment of 1982 only the effective duty actually paid by the appellants after taking into account the exemption available under notification was the deductible from their cum-duty price to arrive at the assessable value of their goods. In 1985 (22) E.L.T. 615 (Tribunal) = 1985 E.C.R. 770 (CEGAT) (M/s. Modi Vanaspati Mfg. Co. v. Collector of Customs and Central Excise, Meerut), the Tribunal has considered the import of the term payable . In paragraph 27 it is observed that :- The term payable is brought in only for the purpose of indicating that where there are duties under more than one Act, the amount of duty payable shall be the total of the effective duty under each such Act. The term payable has no relevance to the question how the expression effective duty of excise under any particular Act is to be interpreted. This finding of the Tribunal with which we agree indicates that there is no force in the contention that an assessee would be entitled to the exclusion of the excise duty even though it was not actually paid. 12. It is also seen that the Hon ble Supreme Court in their recent decision dated 7-5-1996 in the case of Assistant Col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le goods includes duty i.e. it is cum-duty price whereas Department s contention is that it is a price without duty because they did not pay any duty at the time of removal of goods. 19. This question in my view is a question of fact to be determined on the basis of the Contract of Sale between the appellants and its customers and not a question to be determined on inferences and hypothetical premises. If the appellant company on the basis of Contract or Agreements of Sale, has a right to recover duty separately from its customers, apart from the price already charged, then the price charged by it is to be treated as price (ex-duty). If on the other hand, the appellants do not have the legal right to recover duty now, apart from the prices already paid by the customers, then those prices are to be considered as cum-duty prices. I must make it clear that we are concerned with the legal right of the appellant company as seller of goods to pass on the burden of duty to its customers in terms of Sale Agreements and not the actual enforcement of those rights. 20. Let me examine the facts now in this case. Department s sole contention for treating the prices charged by the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough when they sold and removed their goods from their factory, they did not pay any duty. 22.3 Learned Brother has quoted from para 8 of the said Report as a first quotation and from para 20 ibid as a second quotation in Paragraph 12 of his Order. In order to appreciate what the Apex Court has held, I reproduce paras 8 and 20 of the said Report :- 8. Clause (d) of sub-section (4) of Section 4 lays down that value will include the cost of packing of the goods when the goods are sold in packed condition in certain cases. Sub-clause (ii) of clause (d) provides that the value will not include the amount of duty of excise....... if any, payable on such goods. Otherwise, there will be tax upon the amount of tax which forms part of the price of the goods. But in a case where the wholesale price is not inclusive of any duty payable on the goods, then no question of deduction of any duty for determination of value will arise. Sub-clause (ii) of clause (d) specifically states that what will not be included in the value is the amount of duty of excise, if any, payable on such goods . The phrase if any signifies that if no duty is payable, nothing will be deducted from the wholesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Bata India in my view supports the appellant company. 22.3.(ii) Reading of para 20 makes it clear that Rs. 60.00or less has been taken as the value of the footwear as fixed by the respondents (Bata India) and then the respondents fixed the price above Rs. 60.00 and yet claim exemption. It has, therefore, been ruled by the Apex Court that this is not permissible. Such a factual situation does not exist in this case. 22.4 It is to be noted that no plea of fact was taken by the respondents in that case that Rs. 62.00. Rs. 64.00, Rs. 66.00 was a wholesale-cuin-duty price in asmuch as they have no right to collect any further amount from their wholesalers or conversely, their wholesalers have no liability to make any further payment towards any duty/tax in terms of sale. Had such a plea been available on evidence to the respondents, the result would have been different? Let me concretise what I intend to say by the example of Rs. 66.00 (as wholesale-cum-duty price) from which no deduction has been allowed by the Apex Court in Bata India. Consequently, Rs. 66.00 becomes the ex-duty value. Accordingly, ten per cent duty would be payable on Rs. 66.00 and it will be Rs. 6.60. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e duty are known, the proper and appropriate method of determining the assessable value would be the following formula :- i.e. A.V. = cum-duty selling price - permissible deductions where R is the rate of the duty. In my view, therefore, the appellant company would succeed in their plea that their Selling Price of goods is to be treated as cum-duty price, if the Department is not able to show that the appellant company had a legal right in terms of Sale Agreement to recover further amounts towards duty from its customers. This, the Department has failed to do. The appellant company, therefore, succeeds. Its duty liability is to be calculated by treating their Selling Price as cum-duty price. Here, I would also like to refer to few of the recent decisions of the Tribunal in the cases of Indian Oxygen Ltd. v. Collector of Central Excise, Bhubaneswar reported in 1997 (89) E.L.T. 557 (Tribunal) = 1996 (16) R.L.T. 867 and Quorer Electronics Pvt. Ltd. v. Collector of Central Excise reported in 1999 (109) E.L.T. 967 (Tribunal) = 1996 (16) R.L.T. 138 (T). I was also a party to one of the decisions. 24. In view of the foregoing discussions, I hold that duty liability of the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the following decisions :- (i) Develope Pump Industries v. Collector of Central Excise, New Delhi - 1987 (28) E.L.T. 385 (Tribunal). (ii) Assistant Collector of Central Excise v. Bata India Ltd. - 1996 (84) E.L.T. 164 (S.C.) = 1996 (64) ECR 678 Supreme Court. (iii) Government of India v. MRF - 1995 (77) E.L.T. 433 Supreme Court. The Tribunal decision at Sl. No. (i) above was of a case where the concerned appellant like the present one had removed the goods without payment of duty availing of exemption from duty which was then held to be inadmissible to them leading to demand of duty. Their plea that the value of goods removed should be taken as cum duty value and not ex duty was not accepted. The Tribunal held that the appellants were not entitled to the exclusion of the excise duty which admittedly was not paid by them. The next decision relied upon by the learned Technical Member is the one by Supreme Court in the Bata India Ltd. case. The relevant finding there followed by him is extracted in para 12 of the referring order and is to the effect that where the wholesale price is not inclusive of any duty payable on the goods, then no question of ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being below a specified level. The exemption is dependent on the total value of clearances in a year. That value has to conform to the contours of Section 4 of Central Excises Act. In terms of sub-section (4) clause (d) (iii) under the said Section value does not include the amount of excise effectively payable on such goods after giving effect to any exemption Notification. This will only mean that where a manufacturer avails of an exemption and pays the exempted rate to duty, it will be only that exempted amount that will be deducted from the cum duty and not the normal rate of duty without the benefit of exemption. In the present case, no doubt, the appellant did not pay duty initially has paid duty subsequently. Appellant s claim is that such duty subsequently paid had not been recovered from the purchaser but borne by the appellant himself. This has not been controverted. The price has been taken as ex duty and not inclusive of the duly only on the ground that duty had not been paid at the time of clearance. The Tribunal decision in the Develope Pump Industries case relied upon and followed by the learned Technical Member in his order proceeded on the basis that the duty amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d adopted a scheme which could easily be seen through. Having valued the footwear at less than Rs. 60/- the price was fixed at above Rs. 60/-. No such scheme had been resorted to by the appellant herein. I agree with the conclusion drawn by the learned Judicial Member on the basis of the Supreme Court judgment in the MRF case. 29. In the order proposed by her, learned Judicial Member had referred to the Tribunal decision in Indian Oxygen Ltd. v. Collector of Central Excise, Bhubaneswar - 1997 (89) E.L.T. 557 (Tribunal) = 1996 (16) R.L.T. 867 wherein it had been held that if the invoices do not show that duty had been charged in addition to the price and if there is no other evidence that duty has been charged separately then the invoice price should be taken as the price inclusive of Central Excise duty and that Central Excise duty should be excluded in terms of Section 4 to arrive at the assessable value. Similar view has been taken in various other appeals by the Tribunal applying the aforesaid statutory provision. In the circumstances, I respectfully agree with the order proposed by the learned Judicial Member. 30. The papers may be placed before the Bench which passed the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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